Chinese Refiners Rush To Stock Up On Crude Oil
11.07.2022 By TankTerminals.com - NEWS

November 7, 2022 [OilPrice.com] – Chinese refiners have increased their crude oil purchases ahead of the year’s end as they see higher fuel exports in the final months of the year.

 

According to Bloomberg, Chinese companies have bought at least 10 million barrels of crude over the past week, mostly from the Middle East, West Africa, and Brazil, signaling the demand situation has changed for the better.

One of the main reasons for this demand optimism is the global diesel shortage. A decline in global refining capacity, especially in Europe and the United States has curbed the supply of the fuel that is essential for every economy and now there are warning signals flashing on both sides of the Atlantic.

China is one of very few countries in the world that have the refining capacity to boost diesel production significantly enough to alleviate some of the pain, and Chinese refiners are grabbing the opportunity as their margins rebound.

Yet fuel export quotas in China this year are significantly lower, as a whole, than the total for last year, suggesting Chinese diesel supply could have a limited effect on the diesel market.

Still, increased buying from China is invariably bullish for oil prices and this will be no exception. In fact, at least one analytical firm, FGE, is forecasting quite a strong increase in Chinese oil imports towards the end of this year and the beginning of next. FGE expects the daily rate of crude imports to reach 11.5 million barrels in February.

This increase will be driven by independent refiners, FGE said, adding that they will probably be buying more Russian and Iranian oil. Yet state-owned energy majors are also stepping up their purchases of crude in the final months of the year. The shipments will be arriving in December and January, Bloomberg noted.

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